28 February 2020
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Capital city property supply levels tighten

Craig James
17 March 2014

by Craig James

Judging by the low supply of stock on capital city housing markets, home prices are likely to remain firm for some time. RP Data arguably has the best information on housing supply, claiming 100 per cent coverage of listings. RP Data says that it “tracks listing numbers nationally via real estate portals and print media as well as sourcing listings data directly from many of the major real estate groups. This data is de-duplicated and counted providing a decent estimate of how many homes are currently being advertised for sale (effective supply). We also track the number of properties that have sold nationally, ultimately acquiring 100% of property sales directly from individual state government departments.”

Based on the latest data, RP Data estimates that Sydney has 1.7 month’s supply of houses at present and 1.2 months of units. Essentially this means that it would take just 1.7 months – at the current rate of buying – for all the homes currently being advertised for sale, to be sold.

Supply levels in all capital city markets have tightened over the past two years and have now reached record lows in Sydney.

Certainly more supply is on the way. In NSW, building approvals over the last six months were at the highest levels for an equivalent period in almost 11 years. And the lofty prices for established dwellings appear to be prompting buyers to return to the sidelines until more balanced conditions return.

The week ahead

A quiet week is in prospect for Australian economic data in the coming week. The highlight is probably the release of minutes from the last Reserve Bank Board meeting on Tuesday. However detailed data on employment by industry will be issued on Thursday. In the US there is a bevy of economic releases as well as the Federal Reserve decision on monetary policy. And in China, data on home prices is released.

In Australia, the week kicks off on Monday when the Australian Bureau of Statistics (ABS) releases its estimates of new car sales in both seasonally adjusted and trend terms. The industry body – the Federal Chamber of Automotive Industries – has already released the unadjusted sales data for February and this showed that 86,818 new vehicles were purchased in the month, down 3.8 per cent on a year ago. While sales of passenger cars and four-wheel drive vehicles (or sports utility vehicles) were up on a year ago, commercial sales fell.

Also on Monday, investors will work through the implications of election results. On Saturday (March 15) state elections will be held in South Australia and Tasmania.

On Tuesday the Reserve Bank will release the minutes of the Board meeting held on March 4. It was no surprise that Board members left interest rates on hold at the meeting, but any discussion about the Aussie dollar will be of interest.

Also on Tuesday the ABS will also issue data on imports for the month of February. Given the importance of foreign goods in consumer and business purchases, the data on imports will provide a timely guide on economic activity.

The ABS issues the publication “Australian Social Trends 2014” also on Tuesday – investors are likely to see topical articles in the media following the release.

There is nothing of note on Wednesday while on Thursday the ABS will issue more detailed statistics on the job market. This publication will also include the quarterly break-up of data on employment by industry as well as trends in participation rates for demographic groups.

Also on Thursday the Reserve Bank will release its quarterly Bulletin, a publication that contains topical articles on the economy.

Turning attention overseas, the week kicks off on Sunday with Crimea’s planned referendum on joining Russia. While Western nations view the referendum as illegal, the result is likely to increase tensions between Ukraine and Russia and, as a result, pose implications for financial markets.

On Monday there is a bevy of data released in the US including industrial production, capital flows, and the influential Empire State index. Production is tipped to have lifted by 0.2 per cent in February after a 0.3 per cent fall in January with the harsh winter weather complicating analysis.

On Tuesday in the US the Consumer Price Index (CPI) is issued together with data on housing starts and the usual weekly data on chain store sales. If inflation remains near the current 1.6 per cent annual rate, the Federal Reserve won’t be in a rush to tighten policy. And analysts expect that housing starts lifted by around 3.4 per cent in February with fewer weather delays.

The Federal Reserve meets over Tuesday and Wednesday (decision 5am AEDT on Thursday) and is widely expected to continue with the current policy of “tapering” (winding back) bond purchases. Uncertainty about the underlying state of the economy would prevent the Fed from accelerating plans to wind back stimulus.

On Wednesday the usual weekly data on home purchase and refinancing is issued with the December quarter current account figures.

On Thursday, data on existing home sales and the leading index are issued together with the influential Philadelphia Federal Reserve (Philly Fed) survey. And the usual weekly data on claims for unemployment insurance is also released. Economists expect improvement in all the indicators, potentially underpinning investor sentiment on the economy.

In China, the only indicator slated for release over the week is February home sales figures on Tuesday.

Sharemarket, interest rates, currencies & commodities

Based on current pricing, financial market participants don’t expect interest rates to change in 2014. At best, the chances of an interest rate cut this year are placed at 10 per cent. And the pricing in the OIS market is reasonably consistent from one month, out to 12 months.

It is a similar situation on the bank bill market. Physical bank bill yields are holding from 2.63 per cent for a 30-day term out to 2.67 per cent for 180 days. The implied yield on 90-day bank bill futures stands at 2.62 per cent in June, 2.64 per cent in September and 2.71 per cent in December.

The Reserve Bank commodity price index was down sharply in US dollar terms in February, lower by 11.5 per cent on a year ago. But courtesy of the lower Aussie dollar, prices were actually up 1.8 per cent in local currency terms with rural commodities leading the charge, up 4.6 per cent.

Upcoming economic and financial market events


  • March 17 - New car sales (February) - Weaker commercial vehicle sales in the month
  • March 18 - Imports of goods (February) - One of the timeliest readings on economic activity
  • March 18 - Reserve Bank Board minutes - Minutes of March 4 Board meeting
  • March 20 - Detailed employment data (February) - Includes employment by industry


  • March 17 - US Industrial production (February) - A modest 0.2% increase is tipped
  • March 18 - China House prices (February) - Prices are up 9.6% over the year
  • March 18 - US Consumer prices (February) - Prices are up 1.6% over the year
  • March 18 - US Housing starts (February) - Expected to reveal a lift from 880,000 to 910,000
  • March 18,19 - US Federal Open Market Committee - Expected to continue with current ‘taper’ plans
  • March 20 - US Existing home sales (February) - A lift in the annual rate is expected; up from 4.62m to 4.66m
  • March 20 - US Leading index (February) - A solid 0.4% increase is expected
  • March 20 - US Philadelphia Fed (March) - Influential business survey

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